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FAQ: How do I distribute capital losses in a Trust as a net loss to beneficiaries?

Capital losses may never be attributed to a beneficiary. Both para 80(1) (vesting of asset in resident beneficiary) and para 80(2) (vesting of capital gain in resident beneficiary) of the Eighth Schedule to the Income Tax Act, 1962 permit only capital gains to be attributed to a beneficiary. As regards para 80(2), if gains and losses in the trust have arisen from transactions with third parties or with the same connected person, it would be possible to retain gains in the trust to cover the trust losses and to vest the balance of any remaining capital gain in a resident beneficiary. See the LAPD-CGT-G01 – Comprehensive Guide to Capital Gains Tax in 14.11.6.2.

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